Senate passes bill extending Medicare sequester cut pause

Dive Brief:

  • The Senate passed a bill Thursday extending the pause on Medicare sequester cuts through the duration of the COVID-19 public health emergency on a 90-2 vote.
  • The House passed different legislation last week that would extend the moratorium through the end of 2021, and includes a provision to eschew budget rules that would have imposed additional cuts on Medicare payments to providers.
  • The cuts are slated to go back into effect April 1, and the House isn’t expected to take up the Senate bill until it returns from Easter recess the week of April 13. CMS will likely hold the Medicare claims until the bill is signed into law as it has done previously, according to the American Hospital Association.

Dive Insight:

The Coronavirus Aid, Relief, and Economic Security Act initially put the cuts on pause as providers grappled with the pandemic’s early days, and provider groups cheered the extension saying they aren’t out of the woods yet. 

“Despite advances in vaccinations and slowing rates of COVID-19, the pandemic has not ended,” Chip Kahn, CEO of the Federation of American Hospitals, said in a release.

“This pandemic has stressed our frontline caregivers and stretched our hospitals to the brink. That is why the lifeline extended to health care clinicians and providers by the Senate today is essential to assuring care for both COVID and non-COVID patients alike,” Kahn said.

To pay for the extension on the pause, the Senate version of the bill would ultimately extend sequestration, scheduled to expire at the end of fiscal year 2030, through the 2031 fiscal year.

The cuts were part of a 2012 deal to offset deficits and cut most Medicare payments to providers by 2%.

The House bill passed March 19 on a 246-175 bipartisan vote. That version includes a provision that would eliminate an additional 4% Medicare sequester as required by pay-as-you-go rules to offset part of the cost of passing the latest pandemic relief package, the $1.9 trillion American Rescue Plan.

The House needs to pass the Senate language when it returns from break, and is expected to vote favorably.

“Given bipartisan support for the bill, as well as the passage of a similar bill in the House earlier this week, we see high probability that the measure will pass in the Senate,” Jefferies analysts said in a note.

“We expect follow-up legislation to be introduced and passed before October that would block PAYGO cuts on Medicare rates,” the analysts said.